There’s a seismic shift happening in the real estate market. The Millennial generation has become the most dominant market segment in the home buying arena. It may have taken us some time to get here, but now that we are – we’re changing the way it’s done.
Our lateness to the home purchasing party isn’t because we prefer the comfort of living in our parents' basements over the prospect of having our own place. Rather, for a bulk of my generation, it's the affordability of owning a home that presents the biggest barrier to the real estate market.
Competing PrioritiesOur status as the most college-educated generation comes at a cost - Student Loan Debt. Fun fact: there are more than 45 million borrowers who collectively own $1.5 trillion in student loan debt - that's right Trillion. According to the Federal Reserve, a "$1,000 increase in student loan debt causes a 1 to 2 percentage point drop in home ownership rate for student loan borrowers during their late 20s and early 30s." The Fed attributes student loan debt to the 20% drop in home ownership. So, while we would absolutely love a beautiful home with a nice big yard for our dogs, we simply have to prioritize paying off our debt before making a property investment. This is especially true when you consider just how expensive it is to buy a home.
Short SupplyIf you’ve ever watched the shows Fixer Upper or Property Brothers, you’re probably familiar with the real estate term: Starter Home. A Starter Home is usually the first house that a family or individual can afford to buy. In the real estate industry, it commonly denotes a small one- to two- bedroom home that is older and may require a bit of renovating. As it turns out, Starter Homes are actually in short supply in many U.S. cities. According to a report by Realtor.com, the number of homes listed at $200,000 or less (the range at which many first-time buyers with a limited budget tend to shop) has dropped over the past year. The number of homes priced over $750,000, however, grew by 11% last year. Additionally, the rate of single-family home construction is also lagging. With a limited supply, would-be first-time home buyers are stuck renting.
Revolutionizing Real EstateFor those of us that are breaking out of the rental cycle, we’re changing how real estate is done. Our captivation with technology has revolutionized many industries and aspects of our lives - house purchasing is no exception. While past generations would find their homes through personal referrals to realtors, flipping through the Yellow Pages, or simply wandering into an open house. Millennials do not (and simply can’t) afford to rely on a stroke of luck.
According to the National Association of Realtors, 81% of older Millennials found their home through a mobile app. That's right, we're swiping left and right for our houses, too.The real estate world has caught on and is leveraging technology to continue capturing the youngest generation of home buyers.
- Research: Like they would for countless other purchasing decisions, Millennials are doing their research when it comes to home buying. With the rise of real estate apps and sites, Millennials have the ability to understand the market before they go through the purchasing process.
- Match Making: Realogy has partnered with TurnKey Home Purchase Service to create a unique home-buying experience. By simply asking a few questions online, the potential home buyer is matched with an agent who is best suited to help them in their home search.
- Real-time Updates: American real estate database Zillow keeps potential home buyers well-informed on properties of interest by offering regular email alerts. When users opt in for updates, they’ll receive notifications when properties change in price or status.
- Social Media: Pinterest, Instagram, Facebook, and even LinkedIn are go-to sites for Millennials searching for a home. Social Media Marketing, as a result, has found a place in the real estate market.